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The authors study how firm and foreign market characteristics affect the geographic distribution of exporters' sales. To this purpose, they use export intensities (the ratio of exports to sales) across destinations as the key measures of firms' relative involvement in heterogeneous foreign markets. In a representative sample of Italian manufacturing firms, they find a robust negative correlation between revenue-TFP and export intensity to low-income destinations and, more generally, that the correlations between export intensities and TFP are increasing in per capita income of the foreign destinations. They argue that these (and other) empirical regularities can arise from the interplay between (endogenous) cross-firm heterogeneity in product quality and cross-country heterogeneity in quality consumption.
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